Small brewers seek to expand market in Texas

Published 10:05 pm, Monday, March 4, 2013

AUSTIN, Texas (AP) — From his pizza pub in San Antonio, Scott Metzger has built a modest business around brewing offbeat ales with names like Broken Treaty, eXXXtra Pale and End of the World.

Now he wants to be known as a job creator. On Tuesday, he plans to go before the Texas Senate's Committee on Business and Commerce, which has agreed to consider legislation that would expand the market for craft beers.

"I got into this business partly because I'm a little overconfident in my own abilities," Metzger said. "But I think the sky's the limit."

Under current regulations, some dating to the Prohibition era, small brewers operate under rules that do not apply to big national brands such as Budweiser, Miller and Coors.

In a recent report for an industry trade group, Metzger counted 37 breweries and 41 brewpubs in the state. Together, they produced 133,000 barrels of beer in 2011, employing 1,244 people with a combined payroll of $24.5 million, Metzger wrote.

While the craft brewers reported a 46 percent increase in production volume over the prior year, most of those surveyed in the report complained that the current laws have restricted their growth.

Sen. Kevin Eltife, R-Tyler, has filed a group of bills that would clear the path to grocery stores shelves for the custom-made concoctions favored by beer connoisseurs.

One bill would allow restaurants with in-house brewing facilities, including Metzger's Freetail Brewing Co., to package their beer for sale in retail stores.

Another would allow beer to be sold for consumption on the premises during tours of small breweries such as New Republic in College Station, Real Ale in Blanco and St. Arnold's in Houston.

Similar bills have failed in the last two legislative sessions. The main opposition came from the trade group Wholesale Beer Distributors of Texas. The group's lead lobbyist, Tom Spilman, did not return a call seeking comment.

This time around, Metzger is emphasizing the implications for the job market.

"We put a lot of people to work," he said.

The craft brewers have rallied broad support, including bipartisan co-sponsors for the legislation. And they have won the endorsement of the Beer Alliance of Texas, a breakaway group of distributors with significant statewide market share.

"We think this will help stimulate economic development, growing the size of these breweries and making more kinds of beer available to consumers," the group's president, Richard Donley, said.

An aide to Sen. John Carona, R-Dallas, chairman of the Committee on Business and Commerce, gave the legislation a sign of confidence.

"It looks better than it ever has for craft beer legislation," aide Steven Polunsky said, adding that "there's a lot of negotiation and discussion yet to happen."

However, Carona is author of Senate Bill 639, which would prohibit makers of alcoholic beverages from setting different prices for different wholesale distributors.

Metzger and Donley said they plan to oppose Carona's bill, a position that could complicate negotiations on their favored craft brewery bills. On their side — if only in that part of the fight — will be the Texas Association of Business, the Texas Association of Manufacturers and Anheuser-Busch InBev. All three contacted The Associated Press with criticism of the chairman's bill, which they referred to as anti-consumer and anti-competitive.

"Senator Carona's intent is tomorrow to have a full hearing on it," Polunsky said. "We do expect that there'll be some beer distributors who testify in favor of it."